Corporate Crisis Messaging: Wells Fargo
Select a corporate crisis that gained national news attention and hurt the organization’s reputation with customers and the community.
Part I:
In 500-750 words: Provide a short description of the crisis (how it began, the damage it caused, etc.) Describe why this was considered a crisis and not a conflict.
Describe how the organization managed the crisis. Evaluate how successful or unsuccessful the organization was in managing the crisis. Describe the effective methods the organization used to address the crisis and recommend what the organization could have done differently to handle the situation more effectively, if necessary.
Part II:
Imagine you work in the organization you selected and have been asked to write some internal and external communications to address the changes the organization is instituting as a result of the crisis.
Determine the changes that the organization implemented as a result of the crisis, or changes you feel it should/should have implemented.
Create an internal corporate message to communicate the changes that will be implemented. (150-200 words)
Create an external corporate message to communicate the changes to the customers, stakeholders, or public. Choose a communication channel that is most effective to reach your intended audience. (150-200 words)
Use three to five scholarly resources to support your explanations
Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center.
Corporate Crisis Messaging
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Corporate Crisis Messaging
Part I
Wells Fargo is a multinational financial institution that deals with a broad range of products and services, including commercial banking, investment banking, personal loans, credit cards, and wealth management. Indeed, it’s headquarter is in San Francisco, California, the United States of America (USA). Wells Fargo serves many customers from the USA and internationally. In 2002, bank managers introduced a new policy that required employees to meet unrealistic sales targets. For instance, workers were expected to open a specific number of accounts. However, the only thing that the bank did not do is to advertise its products and services aggressively to attract new customers so that its employees can meet the set sales goals. As such, workers started falsifying clients’ records, misusing customers’ information, and forging signatures to open fake accounts so that they could meet sales targets (Merle, 2020). That was how the Wells Fargo crisis started, and bank managers knew about it, but they did nothing to combat it. As such, the bank collected millions of dollars, which they charged as fees for the newly registered accounts.
In over a decade, Wells Fargo’s managers did not stop employees from registering new fake accounts through document falsification and forgery. In addition, they engaged in this immoral, unethical, and illegal behavior without the consent of their customers. The situation escalated into a crisis since clients raised alarm when they realized that they were charged for services they did not initiate. The Securities and Exchange Commission (SEC) and the Department of Justice investigated the issue and found that the bank engaged in fraudulent activities. In that light, Wells Fargo was fined $3 billion, which is one of the biggest corporate penalties. Based on the Central District of California’s attorney, Nick Hanna, Wells Fargo destroyed its reputation, which has taken more time to build, for short-term profits and ended up hurting its customers and its community (Merle, 2020). As a result, the Federal Reserve banned the bank from expanding its investment portfolio until it comes up with proper strategies to fix its internal organizational cultural issues.
A corporate crisis is a situation that threatens organizational operations and their existence (Coombs, Holladay, & White, 2020). Wells Fargo’s event was not a conflict since the bank leaders knew about the consequences of the aggressive sales goals but did nothing to address the problem. Wells Fargo was unsuccessful in managing its crisis until the SEC and DOJ intervened after customers’ uproar. Notably, bank managers ignored the crisis and thought that the institution was generating revenues by charging their customers for non-existent services they had not requested...